CongressDaily reports that Defense Secretary Robert Gates will announce major cuts to high-cost, high-profile weapons systems, perhaps as early as this week. But as important as which particular programs get the ax is whether Gates can cure the fundamental dysfunctions in Defense procurement. A reform bill on this subject is now moving through the Senate and House.

Why do so many weapons come in behind schedule and over budget? Can Gates and Congress change the weapons-buying system radically enough to make a difference when so many reformers before have failed? Is it enough to fix the process of how weapons are bought, or is radical change required in what kinds of weapons we buy? And can the technology-loving U.S. military, now fighting two low-tech insurgencies, learn to live within its means as budgets recede from their post-9/11 highs under the pressure of the recession and federal financial bailouts?

16 Responses

April 9, 2009 10:48 AM

I actually interviewed some real experts on this — who will remain forever unnamed — and this is what I got:
One view is that Defense Acquisition represents a failure of process. This failure does not always show itself in big ways. In the Navy for example, it shows itself in putting off necessary class-updates — like letting the Aegis CG-modernization slip and slide. Or it shows in failing to build in big margins in a new ship-class, so it becomes worthless in just a few years because it cannot grow to assimilate new systems. Or maybe it is just “an unacceptable program” like the San Antonio LPD, or deliberately leashing your new wonder-DDG — now cancelled — to just 14,000 tons. So now it is too small to be the next cruiser hull. Surprise! Now there is not even a small upside to all the billions in taxpayer cash you just squandered.
The other view is altogether more disheartening: perhaps even hair-raising. You see how our courtier class — whether New York Times bureau or raging Ralph Peters &mdash...

I actually interviewed some real experts on this — who will remain forever unnamed — and this is what I got:

One view is that Defense Acquisition represents a failure of process. This failure does not always show itself in big ways. In the Navy for example, it shows itself in putting off necessary class-updates — like letting the Aegis CG-modernization slip and slide. Or it shows in failing to build in big margins in a new ship-class, so it becomes worthless in just a few years because it cannot grow to assimilate new systems. Or maybe it is just “an unacceptable program” like the San Antonio LPD, or deliberately leashing your new wonder-DDG — now cancelled — to just 14,000 tons. So now it is too small to be the next cruiser hull. Surprise! Now there is not even a small upside to all the billions in taxpayer cash you just squandered.

The other view is altogether more disheartening: perhaps even hair-raising. You see how our courtier class — whether New York Times bureau or raging Ralph Peters — is totally stuck in a “boom-layman” Defense conversation. This is not only armchair-handicapping weapons’ winners and losers, but also a mindset that believes the Defense budget is simply the sum of its weapons’ systems.

But what if someone told them how cost overruns now total anywhere from $800 billion to $1.6 trillion — and who knows because there is no real accounting? What if they then found out that all the real money is in O&M — that the heroic Gates’ cuts represent at best just 5% of the overruns, and manages merely to axe capitalization?

In this argument it is not process that has failed Defense Acquisition but talent — as in, it is not there. For example the United States Air Force has reduced General Officer/SES Acquisition billets by 50%. In the Army “you can’t get into Acquisition until you have failed at nearly everything else.” And the Navy — well it is worse, much worse.

Hence after being unable to up-armor our Humvee’s for four years — all the while sustaining perhaps 60% of our entire casualties in the Iraq War (in those vehicles!) — we finally get oodles of sanitation-truck-like MRAPs, when the need has passed. No wonder soldiers say that when we finally leave Iraq we should exit all MRAPs, engines running, keys in the ignition, and just go — because Iraq is the one and only place where they are good to go.

[Interested in why the Secretary gutted FCS? Because he has already spent $17.6 billion on Army vehicles such as … yes!]

So what do I think? I think — no, I know — that reform is not going to happen. It certainly will not come in the form of Acquisition Legions. It might well come in the form of talent — but talent must be appreciated, it must be nurtured, and even more important, it must be found.

What is happening can be called “subsidence.” Let me describe what subsidence means.

The view that Defense Acquisition represents a failure of process gave me a clue. Two vignettes tell it all. When arguing why we must restart the DDG-51 line, his clincher was: “You need them for the industrial base.” Later, describing his Navy SCN “solution” — “when it comes to shipbuilding, you need a consistent budget pattern.”

“Subsidence” means force levels and systems go to hell, but people are taken care of — especially in our long stranglehold of economic subsidence. Notice how Gates talked about hiring thousands of new people — admirably in rhetoric to reform the acquisition system. But also notice the delicate negotiation suggested with Bath and Northrop-Grumman over the DDG-1000 and DDG-51. We are still going to build three of these exquisite marvels of Victorian design — to keep the shipyard workforce employed.

There is — just think about it — no such thing really as the Department of Defense. Sure there is the bureaucratic monster, but it is not in the end about the monster. It is instead about the people. So call it instead the Defense Tribal Confederacy, and go ahead and add up all the numbers. In Fighting Identity: Sacred War and World Change, I do just that [A review can be found here http://www.amconmag.com/article/2009/apr/06/00029/].

Our tribal confederacy, altogether, is somewhere between 25 and 30 million Americans, contractors and families too. It is a nation-within-a-nation. To cut or gut this society of war would not just cripple our world power, it would also kneecap our economy.

Bottom line: The Administration will take care of its Tribal Confederacy, but it will not forever sustain unsustainable military O&M. Just ask: Why in 1991 did we spend $3 billion a month on that Iraq war, while since 2003 we are spending $12 billion a month? Where is it going, and what has it bought us?

The secretary’s announcement on Monday demonstrates his approach to procurement reform is pretty straight-forward—cut anything that is expensive or hard to do. This eliminates risk…except the risk of being totally unprepared for future threats and the risk to destroying the readiness of the current and future force. I believe the secretary when he said that he would have made these changes without regard to the “top line of the defense budget.” That, however, is irrelevant. The fact is that there is no clear apparent strategic rationale behind the cuts other than serving as bill payers for operations in Afghanistan and spiraling defense manpower costs.

Real procurement reform (the kind that does not compromise the future security of the nation) should look very different.

It would start by recognizing that defense spending does not endanger economic growth nor is it a budget “buster.” The United States spent an average of about eight percent of the nation...

Gates Guts Defense

The secretary’s announcement on Monday demonstrates his approach to procurement reform is pretty straight-forward—cut anything that is expensive or hard to do. This eliminates risk…except the risk of being totally unprepared for future threats and the risk to destroying the readiness of the current and future force. I believe the secretary when he said that he would have made these changes without regard to the “top line of the defense budget.” That, however, is irrelevant. The fact is that there is no clear apparent strategic rationale behind the cuts other than serving as bill payers for operations in Afghanistan and spiraling defense manpower costs.

Real procurement reform (the kind that does not compromise the future security of the nation) should look very different.

It would start by recognizing that defense spending does not endanger economic growth nor is it a budget “buster.” The United States spent an average of about eight percent of the national economy (as a measure of GDP) over the course of the Cold War (in an economy that was half the size of the one we have today) and that spending never created the economic turmoil we have now. Today, we spend less than four percent of GDP on the base defense budget. The defense budget is not the source of our economic woes. Cutting the defense budget won’t solve anything either—except eliminate a good number of jobs.

The next step in procurement reform is to fund the Pentagon core defense budget at a consistent, sustainable level. That should be at about four percent of GDP for a decade to maintain current readiness; pay for ongoing operations; and recapitalize the military for the future (in other repair or replace equipment). By my count the proposed budget for next year will be about $26 billion short—and the budgets after that even worse. If these budgets are implemented, not matter what cost-savings or efficiencies the government promises military readiness will plummet.

After that I would recommend the Pentagon and the Congress stop thinking up more nonsensical red tape that just complicates the process of buying anything and will only make an already irrational process worse. Everything I have heard so far from Senators Levin and McCain, for example, sounds mostly like just layering more inefficiency on the system. Secretary Gates' declaration to reduce the percentage of contractors in the government workforce sounds like a metric in search of a purpose—there is no rationale at all behind this declaration.

What should be done is adopt a very reasonable series of steps laid out by my colleague at Heritage, Baker Spring. These include:

Step 1: Overcome the risk-averse mindset at the Department of Defense. Most important, the Defense Department must break free from the risk-averse behavior patterns that undermine innova­tion, slow the acquisition process, and result in inef­ficiency. Program managers and defense contractors spend altogether too much time accommodating the demands of a system that tar­gets their program for termination because it is per­ceived as not eliminating program risk. In this context, an acquisition system that penalizes risk-taking leads to risk-averse behavior patterns, culmi­nating in programmatic paralysis.

Step 2: Increase the overall modernization budget to $200 billion by 2014. Such an increase would also permit the continuation of the slow growth in the percentage of the defense budget that is devoted to modernization.

Step 3: Restore the balance between research and development and procurement. Improving the defense acquisition system also requires restor­ing balance to the relationship between research and development and procurement within the modernization budget. A restoration of the proper funding balance between research and development and procure­ment would provide incentives to the contractor community to push programs out of development and into the hands of the military. Specifically, pro­curement should account for no less than 60 per­cent of overall modernization funding.

Step 4: Open the defense market to new entrants. The defense sector is now over-regulated. The sector was already overly consolidated during the 1990s, and this combination has created entry barriers to the defense market for non-traditional suppliers and reduces competition. Increasing the modernization budget, along with careful steps toward deregulating the defense mar­ket, would create easier entry into the defense sector by new suppliers and increase competition. More competition is the better way to improve efficiency in the acquisition system, particularly given today's circumstances.

Step 5: Congress should exercise self-restraint. Congress itself often contributes to defense acquisi­tion problems. Congressional excesses include the propensity to micromanage defense acquisitions, the earmarking of funds in the defense budget, the irre­sponsible exercise of oversight responsibilities, and succumbing to the temptations of parochialism in defense-related matters.

April 8, 2009 12:00 PM

The popular press likes its protagonists to don black hats and white ones: the evil defense-industrial-complex, the honest civilian bureaucracy, the self-interested Congress and so on. But the Pentagon procurement mess is caused less by good and evil, and more by the cascade of reasonable decisions building into unreasonable outcomes--and those are much more difficult to unravel.

Yes, defense companies like to be paid more, rather than less, for their systems. But the wild cost overruns of recent systems are equally caused by civilian acquisition bureaucrats, who change their mind about system requirements a few years into development--at times based on perfectly reasonable lessons learned in the battlefield, or changing technology--driving costs through the roof as systems designed for one use are redesigned for another requirement set. Add to that Congressional Members who are elected by constituents in part to ensure the economic health of their districts--regardless of whether the jobs they save are in manufacturing electronics for planes or personal computers, and ...

The popular press likes its protagonists to don black hats and white ones: the evil defense-industrial-complex, the honest civilian bureaucracy, the self-interested Congress and so on. But the Pentagon procurement mess is caused less by good and evil, and more by the cascade of reasonable decisions building into unreasonable outcomes--and those are much more difficult to unravel.

Yes, defense companies like to be paid more, rather than less, for their systems. But the wild cost overruns of recent systems are equally caused by civilian acquisition bureaucrats, who change their mind about system requirements a few years into development--at times based on perfectly reasonable lessons learned in the battlefield, or changing technology--driving costs through the roof as systems designed for one use are redesigned for another requirement set. Add to that Congressional Members who are elected by constituents in part to ensure the economic health of their districts--regardless of whether the jobs they save are in manufacturing electronics for planes or personal computers, and the problem compounds. The problems with procurement are beautifully described in a March 2009 GAO report meticulously detailing the cost overruns of each of the major weapons systems under consideration: http://www.gao.gov/new.items/d09326sp.pdf.

Gates has laid out an ambitious and laudable plan to change direction in certain areas. His focus on counterinsurgency, special operations troops and requirements, and on materiel desparately needed for our current fights--such as helpicopters--is important in overriding the parochial interests of the services. His desire to put people first, admitting the long-term, necessary costs of funding veterans with TBI, for instance, is far more honorable than the Bush Administration's shirking of its duty towards those who have fought for our country.

On weapons procurement, however, Gates' rhetoric and programs don't always match up. Gates says he is favoring today's wars over future wars. Loren Thompson writes here that Gates favors ground troops over the Air Force. But the reality is that Gates is funding the F-35 boondoggle, including the Air Force portion of that, which is not necessary now--while potentially slashing the small unmanned vehicles in the Future Combat Systems, which are in high demand from todays' troops on the ground. The F-35 was a plane that was supposed to increase interoperability with allies, and if we're funding an unnecessary program to please allies, we should say so--otherwise, it doesn't make sense.

Moreover, while increasing the civilian acquisition bureaucracy makes a lot of sense on its face, Dov Zakheim's points about the reasons the civilian acquision force was cut in the first place are right on the money. Bringing a huge acquision bureaucracy back into the Pentagon may trade one problem (outsourcing of acquisition to self-interested contractors) for another (risk-averse civil servants driving up costs through lack of knowledge). The former may look worse than the latter--especially to muckraking journalists--but there is no reason to believe that the outcome for the taxpayers or the troops will actually be better with this change.

I wish Gates luck, and I know of few more able and intelligent to unravel this mess. But it will take more than just political will--it will take a deep focus into incentive structures, personnel management, and learning to ask for the possible--if we want to make procurement more reasonable.

April 8, 2009 9:04 AM

If you want to grasp why Robert Gates will not succeed in changing the acquisition system, you need look no further than his Monday program decisions. Air power got clobbered, while land and sea power were merely trimmed. The Air Force lost its top-of-the-line fighter, its next-generation bomber, its next-generation search-and-rescue helicopter, and the only jet airlifter currently in production. A military requirement for each program was clearly present. What was missing was an effective advocate for air power -- Gates purged all of those last year, at least partly because they didn't share his program priorities. In the program-cutting process, his key military advisors -- the chairman and vice-chairman of the Joint Chiefs -- both hailed from the sea services. So we're going to build a lot of warships, and no new bombers. Duh. That's the essence of our current acquisition process -- all politics, all the time.

April 7, 2009 8:04 PM

Under Secretary of Defense (Comptroller) and Chief Financial Officer (2001-2004)

Bob Gates certainly is doing the right things to change the Pentagon's broken acquisition system. But then, so did Don Rumsfeld. On September 10, 2001, Rumsfeld told the Pentagon bureaucracy that it--the bureacracy itself--was the DoD's most serious problem. A day later, a more serious problem materialized, and acquisition reform never took hold for the remainder of the Bush Presidency.

Maybe Bob Gates, and his able deputy, Bill Lynn, as well as Ash Carter, once confirmed, can bring about the change that Rumsfeld also desired. But it will take more than just internal Pentagon actions. While Gates is to be commended for planning to increase the size of the acquisition corps, that in itself will not solve his problem. After all, that corps was decimated because it was viewed as a bloated bureacracy. Adding to the corps, without implementing a change in the way it operates, may simply recreate the bureaucracy that the Clinton Administration's Pentagon sought to slim down.

Equally, if not more important, is how that acquisition corps is trained, rated, and promoted. Cu...

Bob Gates certainly is doing the right things to change the Pentagon's broken acquisition system. But then, so did Don Rumsfeld. On September 10, 2001, Rumsfeld told the Pentagon bureaucracy that it--the bureacracy itself--was the DoD's most serious problem. A day later, a more serious problem materialized, and acquisition reform never took hold for the remainder of the Bush Presidency.

Maybe Bob Gates, and his able deputy, Bill Lynn, as well as Ash Carter, once confirmed, can bring about the change that Rumsfeld also desired. But it will take more than just internal Pentagon actions. While Gates is to be commended for planning to increase the size of the acquisition corps, that in itself will not solve his problem. After all, that corps was decimated because it was viewed as a bloated bureacracy. Adding to the corps, without implementing a change in the way it operates, may simply recreate the bureaucracy that the Clinton Administration's Pentagon sought to slim down.

Equally, if not more important, is how that acquisition corps is trained, rated, and promoted. Currently, there is no requirement for civilians to obtain anything like the professional education that is sine qua non for promotion in the military. Moroever, with the National Sceurity Personnel System in jeopardy, civilians in the aquisition corps may once again find that promotions are a function of longevity rather than performance. In other words, the acquisition corps once again will favor risk avoidance--the surest way to longevity--over all else. For their part, military officers often view their stints as contracting officers' representatives (COR) as collateral duty, meaning that anything else is more important.

The Pentagon invariably focuses on process change rather than cultural change, and on buzzwords in place of substance ("transformation" has fallen out of favor; "portfolio management" is apparently on its way out as well). Unless the Secretary of Defense and his top deputies can implement a real change in the culture of acquisition, all their efforts, like those of their predecessors, will lead to frustration, and little more.

April 6, 2009 4:51 PM

Just as it did the press, Secretary of Defense Gates decisions on hardware will completely preoccupy Congress. A major food fight is sure to break out over the end of F-22 production at 187 very expensive, not particularly impressive fighters, no new presidential or search and rescue helicopters (for now), no more C-17s, and a very few other clean cut terminations.

While Washington DC hisses and spits over the secretary’s hardware recommendations, it is probably more important to ask, what has changed, and if anything has, where are we now going?

It does not appear that the basic DOD budget has changed; this set of decisions may be budget neutral, or it may even hold in its future expanded net spending requirements.

We have not changed an anticipation to prepare for occupations in foreign lands (the advocates call it “counter-insurgency”), or to continue to spend most of our defense budget on forms of conventional warfare most reminiscent of the mid twentieth century. To fight the indistinct, unspecified conflicts we may have to face in the for...

Just as it did the press, Secretary of Defense Gates decisions on hardware will completely preoccupy Congress. A major food fight is sure to break out over the end of F-22 production at 187 very expensive, not particularly impressive fighters, no new presidential or search and rescue helicopters (for now), no more C-17s, and a very few other clean cut terminations.

While Washington DC hisses and spits over the secretary’s hardware recommendations, it is probably more important to ask, what has changed, and if anything has, where are we now going?

It does not appear that the basic DOD budget has changed; this set of decisions may be budget neutral, or it may even hold in its future expanded net spending requirements.

We have not changed an anticipation to prepare for occupations in foreign lands (the advocates call it “counter-insurgency”), or to continue to spend most of our defense budget on forms of conventional warfare most reminiscent of the mid twentieth century. To fight the indistinct, unspecified conflicts we may have to face in the foreseeable future, what has changed? The strategy? The shrinkage of the hardware inventory and its age? While many decisions were made, the Pentagon-ship of state appears to be very much on the same basic course.

For the defense Department’s broken acquisition system, the Secretary’s endorsement of the Levin – McCain “procurement reform” bill (now watered down at the Defense Department’s urging) means that business as usual is very alive and well. There will be some new bottles for some very old wine, but the bitterness of the taste will still be around as we rush to build untested aircraft (e.g. F-35), endorse problematic, unaffordable ship designs (e.g. LCS), and spend generously to defend against less, not more likely, threats (e.g. missile defense).

For one set of decisions, even if they are unspectacular, Secretary Gates deserves much good credit. He made people his first priority. Hopefully, that was not just rhetorical. The emphasis he put on medical research, caring for the wounded, and family support are all to be greatly commended. I fear, however, that Congress will do little more on this prime issue than simply throw money – as it has in the past.

April 6, 2009 3:11 PM

In the absence of any fundamentally new military strategy, you get confusion. Here is my quick assessment.

- FCS should go away, but since Gates may not think he can cancel it, he is restructuring it to satisfy BAE and GDLS needs to produce some armored vehicles. Unclear what the spin offs are he is talking about. Virtually all of the sensor technology and robots are already in use today in Iraq and Afghanistan. Sadly, no mention of reducing existing inventories of unneeded Army and Marine junk. No mention of rapid prototyping as an alternative to the current industrial age modernization system.

- Army and Marines are well on their way to a condition where nothing new replaces equipment designed in the 1970s for the next 20-30 years. Dumb.

- MRAPs are very limited in their utility. Again, if the enemy is a weakly armed guerilla in a backward country, they may be helpful in moving infantry around provided the enemy does not go off-road or operate beyond the range of rifles. The question is whether it makes sense to use conventional...

In the absence of any fundamentally new military strategy, you get confusion. Here is my quick assessment.

- FCS should go away, but since Gates may not think he can cancel it, he is restructuring it to satisfy BAE and GDLS needs to produce some armored vehicles. Unclear what the spin offs are he is talking about. Virtually all of the sensor technology and robots are already in use today in Iraq and Afghanistan. Sadly, no mention of reducing existing inventories of unneeded Army and Marine junk. No mention of rapid prototyping as an alternative to the current industrial age modernization system.

- Army and Marines are well on their way to a condition where nothing new replaces equipment designed in the 1970s for the next 20-30 years. Dumb.

- MRAPs are very limited in their utility. Again, if the enemy is a weakly armed guerilla in a backward country, they may be helpful in moving infantry around provided the enemy does not go off-road or operate beyond the range of rifles. The question is whether it makes sense to use conventional forces in places like Afghanistan or Iraq at all and why we should invest heavily in niche capabilities to support the wrong force for the wrong tactical mission?

- Unable to decide what we can or cannot afford let alone need in aircraft leads to a confused outcome with F- 22 and F – 35. Clearly, the F-35 may yet go away down the line due to affordability. Norwegians and Italians are already suffering sticker shock. Hard to understand why we should press ahead with the F-35 that is reportedly not ready in any way.

- ISR investments in Reaper and Predator are turning out to be vital to suppress, neutralize or destroy weak enemies in the Islamic World. May not work well against more capable enemies, but the investment is modest for what is viewed as a huge payoff (TF Odin).

- DDG 1000 is a disaster. Sounds like it may go to one demo ship and die after all.

- Too many aircraft carriers now and we don’t need any more: Single point failure problem now and in the future makes them hazardous like dreadnoughts of old. Should go down to 8 carriers now.

- LCS is prohibitively expensive, too expensive to sail into littoral waters and lose. If we are going to build more, they better be real cheap and smaller than what we are building now. No mention of the need for a common hull program with the Coast Guard that would produce 60 vessels in the 1500-2500 ton range, a range with far more utility in the realm of maritime security than what we are doing now.

- No mention of requirement for Navy nuclear attack subs. 4 of these shut down China in 36 hours. We have only 38 nuclear subs now and need far more attack boats to ensure our ability to impose the kind of conditions mentioned in Chinese waters anywhere. Compared to adding troops, it’s cheap. Unmanned Underwater Vehicles will help, but they are not a substitute for American submarine capability in a world where ASW is weak or nonexistent everywhere.

- Talk about acquisition reform sounds like a jobs program for government bureaucrats. How 20,000 more government bureaucrats will help an already complex and convoluted acquisition system is a question I cannot answer. In any case, bureaucrats cannot compensate for dumb ideas from Generals and Admirals. Need to address that problem up front. GEN (ret) Shinseki created FCS as a result of a data free/analysis free decision making process that is common in the armed forces' senior ranks.

- Adding more soldiers and Marines is a waste of money in a world where we absolutely don't want to intervene and occupy anything. Existing structures and organizations are bloated and wasteful; too much overhead and tail, too little teeth. You don't reinforce a failed structure with more troops. You reorganize, reform and extract more capability from the resources your retain. Then, you decide whether to expand or not. Current Army BCTs with the exception of the Stryker brigades are too small to operate without reinforcement as seen in Iraq and Afghanistan. A complete overhaul, not an expansion is in order.

- The TBM changes make sense given the reality that until we have breakthroughs in directed energy, we cannot expect much from hit to kill technology.

- The ABL is a bust and should go away so it's being consigned to R&D. (Must fly la race track pattern directly over the launch site when the missile is launched and has 110 seconds of laser power based on a very volatile chemical mix. Targeting is still problematic. Then, it must land and refuel for many hours.)

April 6, 2009 2:29 PM

Secretary Gates just finished his speech outlining his budget recommendations for Fiscal Year 2010.

Media attention will focus on winners and losers: Canceled were the F-22 fighter, the VH-71 "Marine One" presidential helicopter, the Air Force "CSAR" Combat Search and Rescue helicopter, the TSAT Transformational Satellite communications program, a number of missile defense initiatives, and the combat vehicles that make up most of the Army's Future Combat Systems program. Gates promised increases in unmanned aerial vehicles (UAVs), existing models of helicopters, the F-35 Joint Strike Fighter, and the LCS Littoral Combat Ship.

But Gates also struck at the underlying issues of the acquisition process itself, giving a thumbs-up to the Levin/Spratt bill and pledging to expand the federal procurement workforce by 20,000 personnel by 2015 -- 11,000 existing contractor jobs to be converted to civil service pos...

Media attention will focus on winners and losers: Canceled were the F-22 fighter, the VH-71 "Marine One" presidential helicopter, the Air Force "CSAR" Combat Search and Rescue helicopter, the TSAT Transformational Satellite communications program, a number of missile defense initiatives, and the combat vehicles that make up most of the Army's Future Combat Systems program. Gates promised increases in unmanned aerial vehicles (UAVs), existing models of helicopters, the F-35 Joint Strike Fighter, and the LCS Littoral Combat Ship.

But Gates also struck at the underlying issues of the acquisition process itself, giving a thumbs-up to the Levin/Spratt bill and pledging to expand the federal procurement workforce by 20,000 personnel by 2015 -- 11,000 existing contractor jobs to be converted to civil service positions and another 9,000 entirely new positions.

Gates declared:

"In today’s environment, maintaining our technological and conventional edge requires a dramatic change in the way we acquire military equipment. I believe this needed reform requires three fundamental steps.

"First, this department must consistently demonstrate the commitment and leadership to stop programs that significantly exceed their budget or which spend limited tax dollars to buy more capability than the nation needs....

"Second, we must ensure that requirements are reasonable and technology is adequately mature to allow the department to successfully execute the programs....

"Third, realistically estimate program costs, provide budget stability for the programs we initiate, adequately staff the government acquisition team, and provide disciplined and constant oversight....

"The perennial procurement and contracting cycle -- going back many decades -- of adding layer upon layer of cost and complexity onto fewer and fewer platforms that take longer and longer to build must come to an end. There is broad agreement on the need for acquisition and contracting reform in the Department of Defense. There have been enough studies. Enough hand-wringing. Enough rhetoric. Now is the time for action."

April 6, 2009 10:30 AM

President Obama has said $40 billion can be saved by Defense procurement reforms. Let’s assume he achieves most of that and straightens out the “mess”, despite Norm Augustine’s reservations about the nature of the legislative system and the disincentives to recruit professional managers.

At the same time, the Wall St Journal has projected that Obama’s budget proposals add $6.5 trillion in additional debt – before the problems with social security and medicare are addressed. It is equally a matter of national security to scour the rest of the federal budget for “messes”.

The current budget assumes Defense spending will be held roughly constant from FY 2010 forward. This reduces its share of GNP from four to three percent. The overarching issue is how much security insurance as a portion of the wealth of our nation is needed against unpredictable conflicts.

April 6, 2009 10:05 AM

There is nothing sadder on a Monday morning than talking about the Pentagon procurement process. It is trapped in an ugly and seemingly endless series of challenges that will likely not end quickly -- only mildly ameliorated by cancellations due to budgetary cutbacks. And, even then, not always logically cut.

This is no knock against the good and brave people who manage Defense Acquisition. It does, however, say something about the current system involved in the process -- the Iron Triangle of the Hill, the contractors and the procurers. Let's face it, despite Congressman Skelton's best intentions, most Congressman and their staffs view wasteful Pentagon programs as those located outside their districts. And, why shouldn't they bring home monies for their constituencies.

As for the contractors -- often composed on former Hill and Pentagon staff -- well they have to produce revenue for their firms and deal with customer requirements that often shift with the budgetary and programmatic winds.

And the Pentagon, it is in the worst possible position -- buffet...

There is nothing sadder on a Monday morning than talking about the Pentagon procurement process. It is trapped in an ugly and seemingly endless series of challenges that will likely not end quickly -- only mildly ameliorated by cancellations due to budgetary cutbacks. And, even then, not always logically cut.

This is no knock against the good and brave people who manage Defense Acquisition. It does, however, say something about the current system involved in the process -- the Iron Triangle of the Hill, the contractors and the procurers. Let's face it, despite Congressman Skelton's best intentions, most Congressman and their staffs view wasteful Pentagon programs as those located outside their districts. And, why shouldn't they bring home monies for their constituencies.

As for the contractors -- often composed on former Hill and Pentagon staff -- well they have to produce revenue for their firms and deal with customer requirements that often shift with the budgetary and programmatic winds.

And the Pentagon, it is in the worst possible position -- buffeted by political winds on the Hill, subject to an ever changing requirements process still coming to grips with the post Cold War era.

So what's to be done. First, and I believe Secretary Gates is well aware of this given his Intelligence Community experiences, accept the fact this a war of attrition that will take place over several FYDP's. Nothing in this system will move easily as it is still a version of the "military-insutrial complex" that President Eisenhower fretted over nearly 50 years ago.

What Gates and the White House can do is begin the process of trying to rein in spending by using the Office of Management and Budget to guide the Pentagon through a zero-based budgeting of all procurements. The procurements now in place do not reflect the reality of the current defense world -- preparing to take on the ever challenging small nations (North Korea) and the non-nation players (Al Queda). It would also be helpful to use "best practices" from the private sector as a guide. Sadly, we will likely find how hard it is for them, too. However, private firms face a bankruptcy when they get it wrong.

Another fix would be a combination of Congressional and Executive Branch action -- we simply have to put the brakes on the ever symbiotic relationships between contractors and the Hill/Pentagon . There are too many people flowing back and forth and too much money floating about for lobbying for any sense making of the procurement process to take place. The current state is not one of corruption, it is simply one that belies any fresh, objective viewpoints.

It is a war of attrition we are dealing with here. Fast results are highly unlikely and impending budgetary cuts may have more impact in the immediate future. But, we simply have to start somewhere to stop the waste.

April 6, 2009 7:38 AM

In the movie Armageddon, as the protagonists are preparing to be launched into space aboard modified Shuttles, one turns to another and says, “Does it give you pause that we are atop four million gallons of fuel in a vehicle with 250,000 moving parts built by the lowest bidder.” This in a sentence is the reality of the defense (really the government-wide) acquisition process and the reason that acquisition reform is such a difficult challenge.

We want defense industry to do the impossible: build state–of-the-art (actually beyond that, to invent entirely new capabilities) without mishaps or mistakes under the pressure of competitive bidding and the ever-present threat of an IG investigation or Congressional hearing. Moreover, the target keeps moving as the Government changes its requirements or the performance standards (examples abound but let’s just note the VH-71 presidential helicopter, Armed Reconnaissance Helicopter, Littoral Combat Ship, DDG-1000 destroyer, Future Combat System and the NPOESS, SBIRS and STSS satellite systems). Companies...

In the movie Armageddon, as the protagonists are preparing to be launched into space aboard modified Shuttles, one turns to another and says, “Does it give you pause that we are atop four million gallons of fuel in a vehicle with 250,000 moving parts built by the lowest bidder.” This in a sentence is the reality of the defense (really the government-wide) acquisition process and the reason that acquisition reform is such a difficult challenge.

We want defense industry to do the impossible: build state–of-the-art (actually beyond that, to invent entirely new capabilities) without mishaps or mistakes under the pressure of competitive bidding and the ever-present threat of an IG investigation or Congressional hearing. Moreover, the target keeps moving as the Government changes its requirements or the performance standards (examples abound but let’s just note the VH-71 presidential helicopter, Armed Reconnaissance Helicopter, Littoral Combat Ship, DDG-1000 destroyer, Future Combat System and the NPOESS, SBIRS and STSS satellite systems). Companies are asked to develop detailed cost estimates based on the plan to purchase a specified quantity of items. When the Government then turns around and reduces the quantity they will purchase (examples here include the B-2 and the F-22) it is no wonder that the unit cost for the platforms in question skyrocket.

Nor does the Government have the competence to estimate costs and evaluate proposals. This is true for the entire structure of government, not just the Department of Defense. Anyone remember Boston’s “Big Dig”? And that was just a simple highway construction project, something governments have been doing for three or four thousand years. When the demand is for advanced military capabilities, we are talking about not engineering but invention. The amazing thing is not the number of failures, but the fact that there are so many successes.

If there is to be acquisition reform, then it is important to known what problems such reforms should address. The most important of these problems lies not with the defense industry but with the government’s requirements process. Simply put, the requirements process is out of control. There are endless examples of systems being burdened by too many requirements and by continuously changing requirements. The Joint Requirements Oversight Council has failed in its responsibilities to the Department.

DoD is not going to acquire cutting edge capabilities on the cheap. When a new class of fighter, submarine, helicopter or armored vehicle only comes along once every twenty or more years and they are expected to be operational for another quarter century, the price of the new platform will be substantial. On average, the cost of a new system rises three percent a year. That means a doubling of the price with every new generation. Rather than pretending that new systems can be acquired for the same price as the ones that are being replaced (accounting for inflation) the acquisition system needs to acknowledge that when you add new capabilities to a weapons platform the cost will go up (as it does for automobiles when you add air bags, catalytic converters, anti-lock brakes, electronic ignition, etc.).

The problem is the unwillingness of both DoD and the defense industry to admit that the cost of the new system will be higher in real terms than the system that is being replaced. A key reform would be to enforce realistic pricing based on historical data.

A third problem that needs to be addressed is reform of the sustainment process. Operations and Maintenance (O&M) is now the largest account in the DoD budget. Sustainment planning needs to be part of the initial design and development of a military system. Reforming sustainment means, inter alia, expanding the use of Performance-Based Logistics (PBL). The essence of PBL is the purchase of weapons system sustainment as an affordable, integrated package based on output measures such as weapons system availability, rather than input measures, such as parts and technical services. PBL also involves partnerships between the public and private defense industrial bases where each performs the functions in which it excels.

Finally, there is the problem that no one wants to address: Congressional interference in the acquisition process. Virtually every program manager has a horror story about how the appropriations process makes it impossible to achieve program stability. No matter how much Congress tries to reform DoD’s practices, until it deals with its own the results are likely to be relatively meager.

April 6, 2009 7:37 AM

The answer to the question is: No, Bob Gates cannot fix the “Pentagon procurement mess.” Bob Gates is an extraordinarily talented, dedicated and decent individual, but even he cannot do it alone.

To begin with, the Pentagon procurement system is not even a system at all; rather, it is a collection of band-aids and patches placed one on top of the other, each to make certain that some problem that occurred somewhere in some program sometime in the past can never, ever occur again. It is overseen by a 535-member board of directors, each with their own interests, managed by a senior group of political appointees, almost none of whom are even in place today and few of whom will be around more than a couple of years, executed under policy rules, regulations and laws totaling thousands of pages, with fifteen-year projects, a five-year plan, two-year people and one-year money.

The amazing thing is that somehow the “system” has managed to produce the finest military equipment available anywhere in the world: stealth, night vision, GPS, communications satellites—no...

The answer to the question is: No, Bob Gates cannot fix the “Pentagon procurement mess.” Bob Gates is an extraordinarily talented, dedicated and decent individual, but even he cannot do it alone.

To begin with, the Pentagon procurement system is not even a system at all; rather, it is a collection of band-aids and patches placed one on top of the other, each to make certain that some problem that occurred somewhere in some program sometime in the past can never, ever occur again. It is overseen by a 535-member board of directors, each with their own interests, managed by a senior group of political appointees, almost none of whom are even in place today and few of whom will be around more than a couple of years, executed under policy rules, regulations and laws totaling thousands of pages, with fifteen-year projects, a five-year plan, two-year people and one-year money.

The amazing thing is that somehow the “system” has managed to produce the finest military equipment available anywhere in the world: stealth, night vision, GPS, communications satellites—not to mention, in its spare time, the internet. It has done this in considerable part through the use, not always optimally, of technology—technology that made possible the defeat of the world’s fourth largest army not all that long ago in just a few days with a loss of American lives so low as to be virtually without historical precedent.

But that was then, and this is now. Today we have not one but two wars on our hands, each of a character that diminishes the leverage of technology; that is, the ability to trade technology for American casualties. The problem faced by the uniformed military is that no one has thus far guaranteed that they will not be called upon to fight large-scale, so-called conventional wars in the years ahead.

It has of course become a national peacetime pastime to flagellate the defense procurement system…I have been known to engage in the sport myself. But let’s begin by looking at some fundamentals before we begin to articulate the failings—there will still be plenty of the latter to criticize.

First of all, the Pentagon (sic) procurement process is fundamentally a business, and as such should have more in common with sound business practices than with either military combat operations or governance (a la legislation). Second, unlike virtually all other businesses in the land, defense procurement is a monopsony: there is but one customer and that customer is an 800-pound gorilla. But within that monopsony there are mini-monopolies: if the customer (read taxpayer) wanted to buy another, say B-2, there was only one practicable place to have bought it. Third, the companies operating within this environment must still compete exactly as does Intel, Dell or Coca Cola for talented employees, shareholders, borrowings and virtually all other business resources. There are no asterisks on the Wall Street Journal’s stock listing saying, “excused from making a profit: involved in national security.” Finally, the work of those involved in defense procurement—the Pentagon, Congress and industry—have a truly extraordinary fiduciary responsibility. What they do, or don’t do, can cost the lives of large numbers of American soldiers, sailors, airmen, Marines, Coast Guardsmen and, yes, in this day of nuclear proliferation and terrorism, millions of private citizens. The stakes are very high indeed and they demand the absolute best efforts of a share of our nation’s most talented people working within a system that magnifies, not diminishes, their abilities and commitment.

In the mid-1960’s the Fitzhugh Blue Ribbon Commission concluded that the problem (with defense procurement) is that everyone is responsible for everything and no one is responsible for anything. Well said. Even Bob Gates cannot “fix the system” without the help of the folks on the other side of the river—along with a substantial boost from industry.

In my own experience—ten years in the Pentagon and thirty in industry, all working alongside some of the most talented and committed individuals I have known, I concluded that there are three overarching problems undermining the defense procurement process. The first of these is the matter of prescribing requirements for new systems, a rather sterile process that keeps war-fighters and engineers (especially from industry) at arms length…and won’t even let budgeteers and bean-counters in the room. Second is the issue of attracting and retaining talented, experienced (emphasis) managers. Our government personnel policies, albeit often well meaning, have made government service an increasingly unattractive place to be able to contribute. Third, the execution practices embodied in the acquisition process are in many cases unfathomable. Examples:

•What would likely be the outcome if a homeowner went to a builder with a set of drawings and said, “Start on this house—here’s the first year’s installment of funds—and I’ll be back in a year to let you know how much money I have. And, oh yes, I’m thinking of adding a second floor and basement.”

•What would happen if a commercial airline had its flights take off with zero fuel reserves—betting that there will be no thunderstorms or headwinds?

•What would Toyota charge per car if a dealer went to them with a specification for a three-wheeled, turbine powered automobile and said they would like to buy 100 of them?

Welcome to the Pentagon procurement system.

So what, if anything, can be done? The answer is that a lot can be done. However, since that wasn’t the question asked and space and time are limited, not to mention that the answers are largely obvious (read David Packard’s original paper on defense procurement), no attempt will be made to regurgitate them here. However, for the interested, in the next few weeks a group of individuals, military and civilian, with a combined several thousand years of collective acquisition scar tissue, will be releasing a report on how to fix the defense procurement process. The report has been prepared under the aegis of an independent organization called Business Executives for National Security—“BENS,” for short. Stay tuned.

Winston Churchill once said that you can always count on the Americans to do the right thing…after they have tried everything else. Well, we must be getting close.

April 6, 2009 7:36 AM

There’s enough material here for a completely separate blog. Since this is Passover week, I’m going to break this topic down to four questions, with a few initial comments:

1. Are we spending the right amount on weapons procurement?

The procurement budget almost tripled between FY 2001 and FY 2009. Given the fiscal and economic situation, this is only headed in one direction. We’ll see erosion in real and nominal terms. On the other hand, the poor condition of much of the US arsenal implies a budget floor. Spending needs to stay high enough to replace the hundreds of vehicles and aircraft worn out by age and high utilization in Iraq and Afghanistan. This represents the opposite of a peace dividend; it’s an expense that persists long after the war ends.

Much of the increased procurement funding over the past eight years has gone towards vehicles, helicopters, munitions, and other systems needed in Iraq and Afghanistan. Little has been spent on traditional strategic assets, let alone complex new systems such as FCS. The US has completed a st...

There’s enough material here for a completely separate blog. Since this is Passover week, I’m going to break this topic down to four questions, with a few initial comments:

1. Are we spending the right amount on weapons procurement?

The procurement budget almost tripled between FY 2001 and FY 2009. Given the fiscal and economic situation, this is only headed in one direction. We’ll see erosion in real and nominal terms. On the other hand, the poor condition of much of the US arsenal implies a budget floor. Spending needs to stay high enough to replace the hundreds of vehicles and aircraft worn out by age and high utilization in Iraq and Afghanistan. This represents the opposite of a peace dividend; it’s an expense that persists long after the war ends.

Much of the increased procurement funding over the past eight years has gone towards vehicles, helicopters, munitions, and other systems needed in Iraq and Afghanistan. Little has been spent on traditional strategic assets, let alone complex new systems such as FCS. The US has completed a strong budgetary upswing yet the military is stuck with aging equipment. That brings up the next question.

2. Are we buying the right weapons to meet strategic needs?

I don’t understand the new weapons procurement emphasis on counterinsurgency, except as a rationale for serious budget cuts. President Obama campaigned partly on his opposition to the Iraq invasion, and his administration wants to re-make the military to handle another Iraq occupation. Afghanistan, of course, is another COIN front, but that’s a unique case in terms of scope and need. In five or ten years will US forces be doing anything like this?

Also, complex weapons have broad strategic relevance, suitable for everything from diplomacy to confrontation to limited conflict to global war. A strong navy, Air Force, or rapidly deployable land power are perennially useful assets. By contrast, COIN systems tend to be useful for exactly one thing. In a few years, thousands of MRAPs [Mine-Resistant Ambush-Protected vehicles] will be available as lawn ornaments for museums, VFW halls, and anyone with a large lawn. Meanwhile, some weapons have been criticized simply because they haven't been used in Iraq. Presumably, if that thinking was applied consistently the US would stop buying major naval vessels.

3. Are we developing weapons in an efficient manner?

Given myriad recent program failures and notable high profile cost overruns, there’s likely broad agreement that the answer is no. For eight years weapons development has emphasized “transformation” and other terms that implied technology and capability were more important than budget. Given the new budget climate, that will need to change. An independent development costs estimator would certainly help too.

4. Are we purchasing weapons in an efficient manner?

I think we’ve made progress here. Multiyear procurement (MYP) contracts remain an effective tool in controlling costs, primarily because they afford a modicum of program security to the industrial base. The Bush Administration’s efforts to kill the C-130J MYP under PBD 753 failed. This failure was a good thing. For the first time, an MYP was directly threatened, implying that there was no such thing as a secure program.

April 6, 2009 7:32 AM

We do not yet know if Secretary of Defense Gates can fix our defense problems because we do not yet know if he wants to. After piles of rhetoric in his “Foreign Affairs” article last fall and his statements to Congress and the public about “big” changes, we are about to see if the rubber is really going to meet the road.

The initial signs are not encouraging; in reacting to an already hopelessly cosmetic and riddled-with-loopholes bill in Congress to “reform” DOD procurement – the Levin/McCain legislation – Secretary Gates permitted his Deputy, William Lynn, to successfully lobby to make a feeble bill even weaker.

Also, the pre-reporting on Gates’ “big” cuts in irrelevant, hyper-cost weapon systems is that he caved and will ask for a few score more F-22s, which is completely irrelevant to the form of warfare he says we should prepare to fight more (counter-insurgency). The pre-reporting is also that he’ll merely wound, not kill, the preposterously complex and ill-conceived Future Combat Systems program, a concept which has failed tim...

We do not yet know if Secretary of Defense Gates can fix our defense problems because we do not yet know if he wants to. After piles of rhetoric in his “Foreign Affairs” article last fall and his statements to Congress and the public about “big” changes, we are about to see if the rubber is really going to meet the road.

The initial signs are not encouraging; in reacting to an already hopelessly cosmetic and riddled-with-loopholes bill in Congress to “reform” DOD procurement – the Levin/McCain legislation – Secretary Gates permitted his Deputy, William Lynn, to successfully lobby to make a feeble bill even weaker.

Also, the pre-reporting on Gates’ “big” cuts in irrelevant, hyper-cost weapon systems is that he caved and will ask for a few score more F-22s, which is completely irrelevant to the form of warfare he says we should prepare to fight more (counter-insurgency). The pre-reporting is also that he’ll merely wound, not kill, the preposterously complex and ill-conceived Future Combat Systems program, a concept which has failed time and time again in the past - in any form of warfare.

Hopefully, the pre-reporting on these and related decisions is clever deception on Gates’ part and he’ll really move to make our defenses more lethal to real enemies at affordable cost and unload the junk in the defense budget.

Of course, if even a few of the Gates "cuts" are serious, a pork-crazed Congress will go nuts. The big challenge will then become making any serious decisions stick. To do so, President Obama will have to back Gates to the hilt, and both will need to be extraordinarily tough, refuse any stupid compromises (many will be proposed), and fight to the end, including - very definitely - a veto of any defense bill that turns the cuts into hash.

To win that huge fight, Gates and Obama will have make it clear to the public that the "pro-defense" position is to eliminate these high cost, low performing weapons, and inefficient defense spending (jobs-wise) is a drag on the economy. If they fail to win those points for their side, they will lose to the porkers in Congress, and the Obama administration will be a sad replay of the Clinton administration on defense issues where business as usual will predominate and our defenses will continue to shrink and age and become even less ready to fight at increasing cost.

April 6, 2009 7:31 AM

Throughout my time in Congress, repeated efforts have been made to improve the federal acquisition process – some successful, some not. In recent years the problems in DOD’s acquisition system have been particularly severe. Significant reforms are once again needed, in part because the acquisition system must change as DOD’s needs change.

Led by Chairman Robert Andrews (D-NJ) and Ranking Member Mike Conaway (R-TX), the panel will examine the defense acquisition system and possible ways to improve the system’s outcomes. Although it does not have legislative jurisdiction, the panel will report its findings, including any recommendations for possible legislation, to the House Armed Services Committee. Video, audio, and written testimony from the panel’s first hearing on April 1 is available on the HASC web site, as is a copy of the panel’s organizational plan.

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